How does the FCA define 'high-risk firms'?

The Financial Conduct Authority (FCA) defines 'high-risk firms' as those that represent a higher risk to consumers. This definition is grounded in the FCA's mandate to protect consumers and maintain the integrity of the financial market. High-risk firms may engage in activities that expose consumers to greater potential for harm, whether that be due to the nature of their products, their operational practices, or the demographic of their clientele. The FCA seeks to identify and monitor these firms more closely to mitigate potential risks to consumers and ensure market stability.

In contrast, options that refer to low customer engagement, large market share, or international operations do not encapsulate the essence of what constitutes a high-risk firm under FCA guidelines. Low customer engagement might indicate a lack of effective service rather than a direct consumer risk. A large market share could imply stability or influence rather than risk, and international operations alone do not inherently elevate a firm's risk profile without considering other factors that could affect consumer protection.